Edmonton, Calgary see highest mortgage deferral rates in Canada during pandemic

A higher percentage of homeowners in Edmonton and Calgary deferred their mortgage payments than in any other major city in Canada, numbers shared by the Canada Mortgage and Housing Corporation show.

In Edmonton, 21 per cent of mortgages were deferred in August, according to a list tweeted by CMHC president Evan Siddall. Calgary was close behind at 18 per cent. 

Overall, deferrals were sought in 18.9 per cent of mortgages in Alberta — double that of Ontario and Quebec.

"We've been dealing — reeling — already from low energy prices and then shut downs related to COVID have led to people not being able to pay their mortgage bills and led to even more lower prices, leading to more layoffs," said Raja Bajwa, president of the Economics Society of Northern Alberta.

Canada's big banks announced mortgage-relief programs in March and April allowing mortgage payments to be deferred up to six months.

With deferrals coming to an end, it remains to be seen whether those relying on the programs will face foreclosures or find other strategies to continue payments, Bajwa said.

• As mortgage deferral programs wind down, Alberta still has highest rate of deferrals
• Canadians have deferred $1B a month worth of mortgage payments since pandemic began

"This will kind of be holding our breath to see where things are at," he said.

Homeowners who took deferrals fell broadly into two categories, said Todd Bradley, a real-estate agent with Royal LePage in Edmonton: those who used the deferral as a means to stockpile cash or pay off other consumer debt, and people who "really put a Band-Aid on some very intense bleeding."

"There's a big chance that they couldn't make the payments three or four months ago and they couldn't make the payments now that the deferral ends," Bradley said in an interview with CBC Radio's Edmonton AM.

"Those people are going to be in a whole world of hurt."

Bradley predicts the industry will see a jump in foreclosures. 

"I don't think it's going to be calamitous, but they're going to increase."

Although the court system is getting back on track after shutting down early in the pandemic, foreclosure cases are well behind, he said.

"You won't see the foreclosures come from the court probably for another six or seven months — easily that long."

Bradley notes there could be a silver lining for potential buyers, however.

"If you do have stable employment and you have a little bit of down payment, never, ever have interest rates been this low for mortgages."

Lenders will need to plan

Mark Holtom, a mortgage broker with Dominion Lending Centres, believes part of the reason Alberta's deferral proportion was so high was because the province has fewer mortgage holders than Ontario or Quebec.

Banks were not set up to deal with the program when it began, leading to long waits on the phone, which would have been even longer in places with a higher proportion of mortgages, Holtom said.

Those looking for a deferral but not necessarily needing one would have bowed out somewhere along the way, he said.

"I think Alberta maybe was just a little bit luckier in enabling to defer them."

The impact of deferrals will likely be seen in the next six months, Holtom said. But with many people returning to work, he does not see catastrophe ahead.

"You're probably going to see a small percentage of properties that may be going into foreclosure or would normally go into foreclosure," he said.

With the courts backed up, Holtom said, lenders will have to make decisions that could mean further deferrals.

"It's in their best interest to work with those borrowers to actually come up with a plan," he said.